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CEP/Geography Urban and Regional Economics Seminars

The role of local public goods for fiscal policy in the spatial economy

Fabian Bald (University Duisburg-Essen)


Friday 10 June 2022 13:00 - 14:30

32L 2.04, 2nd Floor Conference Room, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

About this event

Regional governments often employ significant financial resources as investments in public goods at the local level. Apart from affecting the attractiveness of their jurisdiction, local fiscal expenditure also has the potential to stimulate local employment via "fiscal multipliers". We exploit exogenous variation in the size of public funds and interregional fiscal transfers to estimate the size of these local employment shifters. To assess the aggregate effects of local budget shocks on employment and regional sorting, we use these multipliers as input into a spatial general equilibrium model with multiple types of workers. In our model, workers are differently affected by local fiscal budgets and local public goods provision in their labour supply decisions. Counterfactual simulations suggest that the inclusion of local labour supply responses as an additional adjustment channel leads to distinct quantitative and qualitative effects on aggregate welfare and productivity in a spatial model with worker mobility.

This event will take place in 32L 2.04, 2nd Floor Conference Room, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

The building is labelled 32L on the map. Enter the building via Lincoln's Inn Fields.

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Urban and Regional Economics Seminars are part of the CEP's Urban and spatial programme.